UK's FTSE rallies on glimmers of Ukraine peace moves

* FTSE 100 up 0.8 pct, having earlier hit new 2014 peak

* Stock markets buoyed by signs of Ukraine peace moves

By Sudip Kar-Gupta

LONDON, Sept 3 Britain's top equity index
touched its highest level in more than 14 years on Wednesday, as
signs that Ukraine and Russia were working on peace moves in
eastern Ukraine lifted global stock markets.

The blue-chip FTSE 100 index briefly hit a peak of
6,898.62 points, which marked its highest level since early
2000, after Ukrainian President Petro Poroshenko's press office
said in a statement that Poroshenko had reached agreement with
Russia's President Vladimir Putin on a "permanent ceasefire" in
eastern Ukraine's Donbass region.

The FTSE then trimmed some of those gains, after Russian
news agency RIA reported that while Putin and Poroshenko had
agreed on steps towards peace in eastern Ukraine, where Kiev
forces have fought pro-Russia separatists, a ceasefire had not
been agreed because Russia is not a party to the conflict.

Nevertheless, the FTSE remained up by 0.8 percent, or 54.15
points, at 6,883.32 points by the middle of the trading day.

"With Russia, things are never black and white. There are
some questions in the background about how solid this ceasefire
actually is. But if a ceasefire can hold and is confirmed, then
we could see a nice move higher," said Dafydd Davies, partner at
Charles Hanover Investments.

KEY TECHNICAL LEVEL NOT BREACHED

The UK stock market was also helped by new signs of economic
growth in Britain, with data showing that Britain's services
industry expanded last month at the fastest pace in nearly a
year.

The backdrop of Britain's economic recovery has led many
traders to expect that the FTSE 100 will hit a record high of
7,000 points later this year.

However, the FTSE has not yet breached the 6,900 point level
- seen as a key hurdle to cross before it can then move on to
challenge record highs.

Both Davies and Beaufort Securities' sales trader Basil
Petrides said they would trade cautiously in the near term and
look to sell out of positions for a profit on days when the
market rose.

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(Reporting by Milan newsroom)

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